Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“A rise to base rate will come as disappointing news to borrowers who are not locked into a fixed rate mortgage, as their monthly repayments may rise in the coming months amid a cost of living crisis. Those borrowers who wish to refinance might be pleased to see that fixed rate mortgages have fallen since the tail end of 2022, and that it is currently cheaper on average to lock into a five-year fixed rate over a two-year fixed deal. The incentive to fix is clear from the continued rise to the average Standard Variable Rate (SVR), which is now above 7%, a level not breached since 2008. A rate rise of 0.25% on the current average SVR of 7.12% would add approximately £772* onto total repayments over two years.

“Affordability may well be the key challenge for borrowers struggling with the cost of living crisis, as interest rates are higher than prospective buyers, or those looking to remortgage, were perhaps anticipating. Whether now is the right time to get a mortgage will entirely depend on someone’s individual circumstances, so seeking advice is vital. In the meantime, it would be wise for borrowers to keep a close eye on the mortgage market, housing supply and house prices, particularly for new buyers who are a critical part of keeping the market moving.”

*Average standard variable rate (SVR) is currently 7.12%. Calculations based on a £200,000 mortgage over a 25-year term on a repayment basis.

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“Savers may be pleased to see another rise to the Bank of England base rate, but they must take time to check their existing savings pots to see if they are earning a competitive return. Not every savings provider will pass on a base rate rise, so it’s crucial for savers to ditch and switch if they find a better return elsewhere. If savers are comparing their easy access savings accounts, they will find challenger banks and building societies are offering some of the best returns, but the majority of the biggest high street brands pay less than 1%.

“Providers are continuing to improve their Cash ISAs, including easy access ISAs, so it’s worthwhile for savers to consider using their ISA allowance before the current tax year ends. Savers must also consider their Personal Savings Allowance when comparing ISA and non-ISA accounts, as there are typically differences in the top returns on offer, but ISAs may remain a more attractive choice amid rising interest rates and for their longer-term tax-free benefits. Keeping on top of the changing market is crucial for savers regardless on which type of savings account suits their needs.”